Exhibit 2.2
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ESCROW AGREEMENT
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This Escrow Agreement is entered into as of _________, 1999, by and among
Open Market, Inc., a Delaware corporation (the "Buyer"), Xxxxxxx Xxxxxxx (the
"Indemnification Representative") and State Street Bank and Trust Company (the
"Escrow Agent").
WHEREAS, the Buyer and FutureTense, Inc., a Delaware corporation (the
"Company"), have entered into an Agreement and Plan of Merger dated July 14,
1999 (the "Merger Agreement"), by and among the Company, the Buyer and a
subsidiary of the Buyer, pursuant to which such subsidiary will be merged (the
"Merger") into the Company which, as the surviving corporation (the "Surviving
Corporation"), will become a wholly-owned subsidiary of the Buyer;
WHEREAS, the Merger Agreement provides that an escrow account will be
established to secure the indemnification obligations of the stockholders of the
Company receiving consideration pursuant to Section 1.5 of the Merger Agreement
(collectively, the "Indemnifying Stockholders") to the Buyer; and
WHEREAS, the parties hereto desire to establish the terms and conditions
pursuant to which such escrow account will be established and maintained;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Consent of Company Stockholders. The Indemnifying Stockholders have,
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either by virtue of their approval of the Merger Agreement or through the
execution of an instrument to such effect, consented to: (a) the establishment
of this escrow to secure the Indemnifying Stockholders' indemnification
obligations under Article VI of the Merger Agreement in the manner set forth
herein, (b) the appointment of the Indemnification Representative as their
representative for purposes of this Agreement and as attorney-in-fact and agent
for and on behalf of each Indemnifying Stockholder, and the taking by the
Indemnification Representative of any and all actions and the making of any
decisions required or permitted to be taken or made by them under this
Agreement, and (c) all of the other terms, conditions and limitations in this
Agreement.
2. Escrow and Indemnification.
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(a) Escrow of Shares. Simultaneously with the execution of this
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Agreement, the Buyer shall deposit with the Escrow Agent a certificate for _____
shares of common stock of the Buyer, as determined pursuant to Section 1.5 of
the Merger Agreement, issued in the name of the Escrow Agent or its nominee.
Upon receipt thereof, the Escrow Agent shall provide written acknowledgement to
the Buyer and the Indemnification Representative of the Escrow Agent's receipt
of such
stock certificate. The Buyer may from time to time deposit with the Escrow Agent
additional shares of common stock of the Buyer pursuant to the final sentence of
Section 1.6(a) of the Merger Agreement (the "Additional Shares"). The shares
deposited with the Escrow Agent pursuant to the first sentence of this Section
2(a), together with any Additional Shares, are referred to herein as the "Escrow
Shares." The Escrow Shares, together with any cash proceeds received from the
sale of any Escrow Shares pursuant to Section 2(b) and held in the escrow
account established hereby, including any investment earnings received from the
investment thereof and held hereunder pursuant to Section 2(b) hereof, are
collectively referred to as the "Escrow Property." The Escrow Property shall be
held as an escrow fund and shall not be subject to any lien, attachment, trustee
process or any other judicial process of any creditor of any party hereto. The
Escrow Agent agrees to hold the Escrow Property in an escrow account (the
"Escrow Account"), subject to the terms and conditions of this Agreement.
In the event the Buyer deposits any Additional Shares with the Escrow
Agent: (i) the Buyer shall accompany the deposit with written notice to the
Escrow Agent identifying such shares as for deposit hereunder, and making
specific reference to this Agreement, (ii) the Buyer shall accompany such
deposit with an amended Attachment A (as contemplated by Section 3(c)) or
written notice stating that no amendment of Attachment A is required pursuant to
Section 3(c) in connection with such deposit and (iii) the stock certificate
representing such shares shall be issued in the name of the Escrow Agent or its
nominee. The Escrow Agent shall be entitled to rely conclusively upon any such
notice, and until it receives any such notice, the Escrow Agent shall be
entitled to rely conclusively on Attachment A. The Escrow Agent shall be under
no obligation to examine any stock certificate delivered to it hereunder, and
shall have no liability for the genuineness, validity, marketability or
sufficiency thereof.
(b) Additional Property Subject to Escrow.
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(i) Any securities distributed in respect of or in exchange for
any of the Escrow Shares, whether by way of stock dividends, stock splits
or otherwise, shall be issued in the name of the Escrow Agent or its
nominee, and shall be delivered to the Escrow Agent, who shall hold such
securities in the Escrow Account. Such securities shall be considered
Escrow Shares for purposes hereof. Any cash dividends or property (other
than securities) distributed in respect of the Escrow Shares shall promptly
be distributed by the Escrow Agent to the Indemnifying Stockholders in
accordance with their percentage interest of the Escrow Shares as set forth
opposite such holder's name on Attachment A hereto, as such percentage
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interest set forth on Attachment A may be amended from time to time
pursuant to Section 3(c) (as so amended from time to time, the "Percentage
Interest"), and in each case to his or her notice address as provided in
Section 10 hereof.
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(ii) At any time beginning on the date that is thirty days after
the date on which the post-closing results of combined operations of Buyer
and the Company have been published (such thirtieth day, the "Permitted
Sale Date"), and subject to any restrictions on resale arising under
federal or state securities laws, the Indemnification Representative may
effect a sale of any or all Escrow Shares by written direction given to the
Escrow Agent provided that: (A) the Indemnification Representative shall
certify to the Escrow Agent that the Permitted Sale Date has passed, (B)
the Indemnification Representative shall certify to the Escrow Agent that
the written directions given by it to the Escrow Agent (pursuant to Section
2(b)(iv) below) shall effectuate a sale, (C) the written directions given
to the Escrow Agent by the Indemnification Representative shall be subject
to Section 2(b)(v) below, and (D) the net proceeds of such sale of Escrow
Shares shall be paid to the Escrow Agent and deposited into the Escrow
Account and become part of the Escrow Property. All related transaction
charges and out-of-pocket expenses (or a reasonably estimated allocable
portion thereof) directly associated with a sale of Escrow Shares shall be
paid from the proceeds of the sale. The Indemnification Representative may
direct the sales of Escrow Shares pursuant to this Section 2(b)(ii) at any
time or times after the Permitted Sale Date.
(iii) Net proceeds of the sale of any Escrow Shares deposited
into the Escrow Account pursuant to Section 2(b)(i) shall be invested in
the Escrow Agent's insured money market account. The interest earnings
received (and any losses incurred) from such investment shall be deposited
in the Escrow Account and shall become part of the Escrow Property (and
shall be reinvested pursuant to the terms of this paragraph).
(iv) Any sale direction given by the Indemnification
Representative pursuant to Section 2(b)(ii) above shall: (A) specify the
number of Escrow Shares to be sold, (B) identify the brokerage firm the
Indemnification Representative requests the Escrow Agent to use (or shall
instruct the Escrow Agent to use its affiliated brokerage service), and (C)
set forth all necessary instructions (including stop loss or minimum price
per share instructions) as necessary to satisfy the required net proceeds
per share requirements set forth in clause (B) of Section 2(b)(ii) above,
together with any other instruction as the Escrow Agent reasonably may
require in order to carry out the sale. The Escrow Agent shall be entitled
to rely conclusively, in good faith, upon such direction and shall be under
no obligation to evaluate or exercise any judgment with respect to any such
instruction received from the Indemnification Representative.
(v) The Escrow Agent shall have no responsibility in connection
with a sale other than to make delivery of the Escrow Shares to the
brokerage firm, to make delivery of related instruction to the brokerage
firm in
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accordance with the instructions received from the Indemnification
Representative and to deposit into the Escrow Account the net sale proceeds
received from the sale. The Escrow Agent shall have no liability for any
actions or omissions of any such brokerage firm, and shall have no
liability for the price or execution achieved. Without limiting the
foregoing, the Indemnification Representative (for itself and on behalf of
the Indemnifying Stockholders), acknowledges that (A) the Escrow Shares may
need to be sent to a transfer agent to be reissued in saleable form, (B)
the Escrow Shares may contain or be subject to transfer restrictions that
may limit their marketability and impose restrictions upon the number or
types of purchasers to whom they can be offered or sold, (C) the Escrow
Agent shall have no liability for any failure or delay (or any price change
during any such delay) on the part of the Indemnification Representative or
any transfer agent, or caused by any necessary registration or delivery
procedures, or compliance with any applicable transfer restrictions, in
connection with the transfer of such Escrow Shares, and (D) the Escrow
Agent shall have no liability if the actual net proceeds received per share
are less than the Value.
(vi) In any agreement entered into by the Escrow Agent with any
brokerage firm (which may be affiliated with the Escrow Agent, as selected
by the Escrow Agent without liability on its part, taking into
consideration the brokerage firm requested by the Indemnification
Representative as provided above), pursuant to Sections 2(b)(iv) and (v),
the Escrow Agent shall be entitled to enter into such agreement on terms
providing that the brokerage firm shall use its "best efforts" to effect a
sale. The Escrow Agent shall be indemnified by the Indemnifying
Stockholders hereunder for any costs, expenses and risks associated
therewith or arising thereunder (other than resulting from its own gross
negligence or willful misconduct).
(vii) In addition to any applicable fees set forth on the fee
schedule attached hereto as Attachment B, the net sale proceeds of any sale
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of Escrow Shares received by the Escrow Agent shall be subject to a $500.00
(per sale order) fee for the proration of the net sales price, individual
1099-B reporting and related administration (the "Sales Administration
Fee"). The Sales Administration Fee shall be borne by the Indemnifying
Stockholders.
(viii) Any liquidation of Escrow Shares pursuant to this
Section 2(b), shall not alter the Percentage Interests of the respective
Indemnifying Stockholders with respect to the remaining Escrow Shares (if
any), and they shall be deemed likewise to have the same respective
Percentage Interests in any cash proceeds received from a sale of Escrow
Shares (and any investment earnings thereon) held in the Escrow Account
from time to time.
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(ix) Notwithstanding any term hereof to the contrary, and
whether or not expressly stated herein, whenever any provision of this
Agreement provides for the distribution or application of the Escrow
Property, such distribution or application shall first be made or taken
from any cash, including investment earnings thereon, then held in the
Escrow Account received from the proceeds of the sale of Escrow Shares as
having a Value (as defined in Section 4 below) equal to such distribution
or application, and thereafter from any remaining Escrow Shares having a
value equal to such distribution or application.
(x) With respect to any cash proceeds held in the Escrow Account
from time to time (and the investment thereof, as provided above):
(A) Tax Reporting. For tax reporting purposes, all interest or other
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income earned from the investment of the Escrow Property in any tax
year shall be reported as allocable to the Indemnifying Stockholders
on a pro rata basis according to their Percentage Interests;
(B) Certification of Taxpayer Identification Number. The Indemnifying
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Stockholders shall provide a certified tax identification number by
signing and returning a Form W-9 (or Form W-8, in case of non-U.S.
persons) to the Escrow Agent prior to the earlier of 30 days after the
date of this Agreement or the date on which any income earned on the
investment of any sale proceeds held as part of the Escrow Property is
credited to the Escrow Account. The Indemnifying Stockholders
understand that, in the event their tax identification numbers are not
certified to the Escrow Agent, the Internal Revenue Code, as amended
from time to time, may require the withholding of a portion of any
interest or other income earned on the investment of the Escrow
Property.
(C) Tax Indemnification. The Indemnifying Stockholders agree, jointly
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and severally, (1) to assume any and all obligations imposed now or
hereafter by any applicable tax law with respect to any payment or
distribution of the Escrow Property or performance of other activities
under this Agreement, withholding and other taxes, assessments or
other governmental reporting that may be required under any laws or
regulations that may be applicable in connection with its acting as
Escrow Agent under this Agreement, (2) to instruct the Escrow Agent in
writing with respect to the Escrow Agent's responsibility for
withholding and other taxes, assessments or other governmental
charges, and to instruct the Escrow Agent with respect to any
certifications and governmental reporting that may be required under
any laws or regulations that may be applicable in connection with its
acting as Escrow Agent under this Agreement and (3) to indemnify and
hold the Escrow Agent harmless from any liability or obligation on
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account of taxes, assessments, additions for late payment, interest,
penalties, expenses and other governmental charges that may be
assessed or asserted against the Escrow Agent in connection with or
relating to any payment made or other activities performed under the
terms of this Agreement, including without limitation any liability
for the withholding or deduction of (or the failure to withhold or
deduct) the same, and any liability for failure to obtain proper
certifications or to report properly to governmental authorities in
connection with this Agreement, including costs and expenses
(including reasonable legal fees and expenses), interest and
penalties. The foregoing indemnification and agreement to hold
harmless shall survive the termination of this Agreement.
(c) Indemnification. The Indemnifying Stockholders have agreed in
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Article VI of the Merger Agreement to indemnify and hold harmless the Buyer from
and against specified Damages (as defined in Section 6.1 of the Merger
Agreement). The Escrow Property shall be security for such indemnity obligation
of the Indemnifying Stockholders, subject to the limitations, and in the manner
provided, in this Agreement.
(d) Voting of Shares. Each Indemnifying Stockholder shall have the
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right to direct the Escrow Agent in writing as to the exercise of any voting
rights pertaining to such Indemnifying Stockholder's Percentage Interest, as it
may be amended pursuant to Section 2(b)(i), unless and until such Escrow Shares
are sold pursuant to Section 2(b)(ii), and the Escrow Agent shall comply with
any such written instructions (and the Escrow Agent shall have no liability for
any action so taken). In the absence of such instructions, the Escrow Agent
shall not vote any of the Escrow Shares and the Escrow Agent shall otherwise be
under no obligation to preserve, protect, exercise or enforce rights in the
Escrow Shares. Neither the Escrow Agent nor the Indemnification Representative
shall be under any obligation to solicit consents or proxies from the
Indemnifying Stockholders for purposes of any such vote.
(e) Transferability. The respective interests of the Indemnifying
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Stockholders in the Escrow Property shall not be assignable or transferable,
other than (i) by operation of law or (ii) in connection with the assignment or
transfer to a partner, stockholder, member or affiliate of the Indemnifying
Stockholder, provided each such transferee agrees in a written instrument
delivered to the Escrow Agent and the Buyer to be bound by the provisions of
this Agreement as an Indemnifying Stockholder. Notice of any assignment or
transfer shall be given to the Escrow Agent and the Buyer, and no assignment or
transfer shall be valid until such notice is given.
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3. Distribution of Escrow Property.
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(a) The Escrow Agent shall distribute the Escrow Property only in
accordance with (i) a written instrument delivered to the Escrow Agent that is
executed by both the Buyer and the Indemnification Representative and that
instructs the Escrow Agent as to the distribution of some or all of the Escrow
Property, (ii) an order of a court of competent jurisdiction, a copy of which is
delivered to the Escrow Agent by either the Buyer or the Indemnification
Representative, that instructs the Escrow Agent as to the distribution of some
or all of the Escrow Property, or (iii) the provisions of Section 3(b) below.
(b) Subject to the provisions of this Section 3(b) and Section 3(c)
below, within five business days after the first anniversary of the date of this
Agreement (the "Termination Date"), the Escrow Agent shall distribute to the
Indemnifying Stockholders (pro rata, as nearly as practicable, according to
their respective Percentage Interests) all of the Escrow Property, including the
Escrow Shares then held in escrow by, (x) in the case of any cash (from the
proceeds of the sale of any Escrow Shares or investment earnings thereon),
payment to the Indemnifying Stockholders according to Attachment A, or (y) in
the case of Escrow Shares, making delivery of the Escrow Shares then held by the
Escrow Agent to the transfer agent of the Buyer duly endorsed for transfer (or
accompanied by an appropriate executed transfer instrument) with written
instruction to the transfer agent of the Buyer to transfer and re-issue such
Escrow Shares to and among the Indemnifying Stockholders (according to their
respective Percentage Interests) and to make delivery thereof to them at their
addresses (as provided in Section 10), or as any such Indemnifying Stockholder
otherwise may instruct. Notwithstanding the foregoing, if (i) prior to the
Termination Date the Buyer has delivered to the Escrow Agent a written notice of
a claim (a "Claim Notice"), which states that it is made pursuant to Article VI
of the Merger Agreement and sets forth a specified dollar amount with regard to
the claim covered thereby, and by the time it is to make a distribution to the
Indemnifying Stockholders pursuant to this paragraph the Escrow Agent has not
received from the Buyer written notice of the resolution of the claim covered
thereby, or (ii) prior to the Termination Date the Buyer has delivered to the
Escrow Agent a written notice of an expected claim (an "Expected Claim Notice"),
which states that it is made pursuant to Article VI of the Merger Agreement and
sets forth a specified dollar amount with regard to the estimated amount of
damages covered thereby, and by the time it is to make a distribution to the
Indemnifying Stockholders pursuant to this paragraph the Escrow Agent has not
received from the Buyer written notice of the resolution of the anticipated
claim covered thereby, the Escrow Agent shall retain in escrow after the
Termination Date (A) the amount of all cash received, including investment
earnings thereon, from the proceeds of the sale of that number of Escrow Shares
having a Value, (B) the number of Escrow Shares as having a Value, or (C) any
combination thereof, equal to the aggregate amount of the claims set forth in
each Claim Notice and estimated damages set forth in each Expected Claim Notice
(such aggregate amount, as set forth therein, the "Claimed Amount"),
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up to the total number of the Escrow Shares and/or the total amount of other
Escrow Property then held hereuner. Any Escrow Property so retained in escrow
shall be distributed only in accordance with the terms of clauses (i) or (ii) of
Section 3(a) above.
(c) Any distribution of all or a portion of the Escrow Shares to the
Indemnifying Stockholders shall be made by delivery of stock certificates to the
transfer agent of the Buyer duly endorsed and with instruction for transfer and
delivery, as provided in the first sentence of Section 3(b) above, and any
distribution of other Escrow Property shall be to the Indemnifying Stockholders
at their respective addresses provided in Section 10 hereof, in each case in
accordance with (as nearly as practicable) their respective Percentage
Interests; provided, however, that the Escrow Agent shall withhold the
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distribution of the portion of the Escrow Property otherwise distributable
pursuant to Section 3(b) above to an Indemnifying Stockholder who has not,
according to a written notice provided by the Buyer to the Escrow Agent, prior
to such distribution, surrendered pursuant to the terms of the Merger Agreement
his, her or its stock certificates formerly representing shares of stock of the
Company; and provided further that Attachment A shall be appropriately revised
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by the Buyer by written notice to the Escrow Agent in the event the Buyer
deposits Additional Shares with the Escrow Agent following the date of this
Agreement. Any withheld Escrow Property shall be delivered to the Buyer or the
transfer agent of the Buyer, as the case may be, promptly after the Termination
Date, and shall be delivered by the Buyer or the transfer agent of the Buyer, as
the case may be, to the Indemnifying Stockholders to whom such cash or shares
would have otherwise been distributed upon surrender of their Company stock
certificates. Upon receipt of Escrow Shares endorsed for transfer and with
instructions from the Escrow Agent for distribution to Indemnifying Stockholders
so provided above, the transfer agent of the Buyer shall make such distributions
to the Indemnifying Stockholders by mailing stock certificates to such holders
at their respective addresses shown on Attachment A (or such other address as
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may be provided in writing to the transfer agent of the Buyer by the Escrow
Agent or by any such holder). No fractional Escrow Shares shall be distributed
to Indemnifying Stockholders pursuant to this Agreement. Instead, the number of
shares that each Indemnifying Stockholder shall receive shall be rounded up or
down to the nearest whole number (provided that the Indemnification
Representative shall have the authority to effect the rounding in such a manner
that the total number of whole Escrow Shares to be distributed equals the number
of Escrow Shares then held in the Escrow Account).
4. Valuation of Escrow Shares. For purposes of this Agreement, the
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"Value" of any Escrow Shares shall be $_____ per share [the average of the last
reported sale prices per share of common stock of the Buyer Common Stock on the
Nasdaq National Market over the five consecutive trading days ending on the date
of this Agreement], multiplied by the number of such Escrow Shares.
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5. Fees and Expenses of Escrow Agent.
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(a) The Buyer agrees (i) to pay or reimburse the Escrow Agent for its
attorney's fees and expenses incurred in connection with the preparation of this
Agreement and (ii) to pay the Escrow Agent's acceptance fee and up to $3,500 per
year of the annual escrow fee in accordance with the fee schedule set forth on
Attachment B, which may be subject to change hereafter on an annual basis.
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(b) The Indemnifying Stockholders agree, jointly and severally, to pay
or reimburse the Escrow Agent on demand for any portion of the annual escrow fee
not required to be paid by the Buyer (including the $35 per Indemnifying
Stockholder per year), the wire transfer fees, extraordinary administrative
expenses and out of pocket expenses in accordance with the fee schedule set
forth on Attachment B.
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(c) Each of the Buyer and the Indemnifying Stockholders (collectively,
the "Interested Parties") agrees, jointly and severally, to pay any legal fees
and expenses incurred by the Escrow Agent in connection with resolution of any
claim by any party hereunder. Without altering or limiting the joint and
several liability of any of the Interested Parties to the Escrow Agent under
this Section 5(c), each of the Interested Parties agrees as between themselves
that they shall share, one-half to be borne by the Buyer and one-half to be
borne by the Indemnifying Stockholders (and, as among them, according to their
Percentage Interests) all amounts payable to the Escrow Agent pursuant to this
Section 5(c).
6. Limitation of Escrow Agent's Liability.
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(a) The Escrow Agent shall incur no liability with respect to any
action taken or suffered by it in reliance upon any notice, direction,
instruction (including without limitation wire transfer instructions), consent,
statement or other documents believed by it to be genuine and duly authorized,
nor for other action or inaction except its own willful misconduct or gross
negligence. The Escrow Agent shall not be responsible for the validity or
sufficiency of this Agreement. In all questions arising under the Escrow
Agreement, the Escrow Agent may rely on the advice of counsel (which may include
in-house counsel), and the Escrow Agent shall not be liable to anyone for
anything done, omitted or suffered in good faith by the Escrow Agent based on
such advice. The Escrow Agent shall not be required to take any action
hereunder involving any expense unless the payment of such expense is made or
provided for in a manner reasonably satisfactory to it. In no event shall the
Escrow Agent be liable for indirect, punitive, special or consequential damages.
(b) The Interested Parties agree, jointly and severally, to indemnify
the Escrow Agent for, and hold it harmless against, any loss, liability or
expense (including, without limitation, attorneys fees and expenses) incurred
without gross
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negligence or willful misconduct on the part of Escrow Agent, arising out of or
in connection with its appointment hereunder on the carrying out of its duties
hereunder. As among themselves, Interested Parties agree that the Buyer, on the
one hand, and the Indemnifying Stockholders, on the other hand, shall each be
liable for one-half of such amounts. The foregoing indemnification and
agreements to hold harmless shall survive the termination of this Agreement.
(c) Each of the Interested Parties acknowledges and agrees that the
Escrow Agent (i) shall not be responsible for any of the agreements referred to
or described herein (including without limitation the Merger Agreement), or for
determining or compelling compliance therewith, and shall not otherwise be bound
thereby, (ii) shall be obligated only for the performance of such duties as are
expressly and specifically set forth in this Escrow Agreement on its part to be
performed, each of which are ministerial (and shall not be construed to be
fiduciary) in nature, and no implied duties or obligations of any kind shall be
read into this Agreement against or on the part of the Escrow Agent, (iii) shall
have no liability for the actions or omissions of (or any delay by) any transfer
agent of the Buyer in connection with the transfer, issuance or delivery of any
Escrow Shares delivered to it pursuant to the terms hereof for re-issuance to
the Indemnifying Stockholders, and (iv) shall be under no obligation to invest
any cash dividends it may receive from the Escrow Shares at any time hereunder
(provided, however, that the net proceeds received from the sale of any Escrow
Shares pursuant to Section 2(b) shall be invested pursuant to Section
2(b)(iii)).
7. Liability and Authority of Indemnification Representative; Successors
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and Assignees.
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(a) The Indemnification Representative shall incur no liability to the
Indemnifying Stockholders with respect to any action taken or suffered by them
in reliance upon any note, direction, instruction, consent, statement or other
documents believed by them to be genuinely and duly authorized, nor for other
action or inaction except their own willful misconduct or gross negligence. The
Indemnification Representative may, in all questions arising under the Escrow
Agreement, rely on the advice of counsel and the Indemnification Representative
shall not be liable to the Indemnifying Stockholders for anything done, omitted
or suffered in good faith by the Indemnification Representative based on such
advice.
(b) In the event of the death or permanent disability of the
Indemnification Representative, or his resignation as the Indemnification
Representative, the initial successor Indemnification Representative shall be
Xxxxx Xxxxxxxx (the "Successor Indemnification Representative") currently
residing (and having a notice address for purposes of Section 10 hereof) at
_____________________. In the event of the death or permanent disability of the
Successor Indemnification Representative, or his resignation or inability to
serve as the Successor Indemnification Representative, another Successor
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Indemnification Representative shall be elected by a majority vote of the
Indemnifying Stockholders, with each such Indemnifying Stockholder (or his, her
or its successors or assigns) to be given a vote equal to the number of votes
represented by the shares of stock of the Company held by such Indemnifying
Stockholder immediately prior to the effective time of the Merger. Each
successor to the Indemnification Representative shall have all of the power,
authority, rights and privileges conferred by this Agreement upon the original
Indemnification Representative, and the term "Indemnification Representative" as
used herein shall be deemed to include any successor Indemnification
Representative.
(c) The Indemnification Representative shall have full power and
authority to represent the Indemnifying Stockholders, and their successors, with
respect to all matters arising under this Agreement and all actions taken by any
Indemnification Representative hereunder shall be binding upon the Indemnifying
Stockholders, and their successors, as if expressly confirmed and ratified in
writing by each of them. Without limiting the generality of the foregoing, the
Indemnification Representative shall have full power and authority to interpret
all of the terms and provisions of this Agreement, to compromise any claims
asserted hereunder and to authorize any release of the Escrow Property to be
made with respect thereto, on behalf of the Indemnifying Stockholders and their
successors.
(d) Except as set forth in Section 2(d) hereof, the Escrow Agent may
rely on the Indemnification Representative as the exclusive agent of the
Indemnifying Stockholders under this Agreement and shall incur no liability to
any party with respect to any action taken or suffered by it in reliance
thereon.
(e) Set forth on Attachment A, attached hereto and made a part hereof
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(subject to amendment from time to time pursuant to Section 3(c)) is the correct
name, address, federal taxpayer identification number and Percentage Interest
for each Indemnifying Stockholder.
8. Amounts Payable by Indemnifying Stockholders. The amounts payable by
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the Indemnifying Stockholders under this Agreement (i.e., the fees or expenses
of the Escrow Agent payable pursuant to Section 5 and the indemnification
obligations pursuant to Section 6(b)) shall be payable solely as follows. The
Escrow Agent shall first be entitled to apply any and all cash held in or
credited to the Escrow Account in payment of such amounts. If available cash
held in the Escrow Account is not sufficient to pay such amount, the Escrow
Agent shall promptly notify the Indemnification Representative of any such
amount payable by the Indemnifying Stockholders and remaining unpaid, with a
copy of such notice to the Buyer. On the sixth business day after the delivery
of such notice, the Escrow Agent shall use the Escrow Property or undertake
reasonable efforts to sell such number of Escrow Shares (up to the number of
Escrow Shares then available in the Escrow Account), subject to compliance with
all applicable securities laws, as is necessary to raise such
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amount, and shall be entitled to apply the Escrow Property and/or the proceeds
of the sale of Escrow Shares in satisfaction of such payment or indemnification
obligations of the Indemnifying Stockholders; provided that if the
Indemnification Representative delivers to the Escrow Agent (with a copy to the
Buyer), within five business days after delivery of such notice to the
Indemnification Representative, a written notice contesting the legitimacy or
reasonableness of such amount, then the Escrow Agent shall not sell Escrow
Shares to raise the disputed portion of such claimed amount except in accordance
with the terms of clauses (i) or (ii) of Section 3(a). Nothing herein shall
impose or imply any limitation on the joint and several liability of any of the
Interested Parties in respect of such amounts payable pursuant to Section 5 or
Section 6(b) to the extent provided in such sections; provided, however, that
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notwithstanding any term hereof to the contrary, in the event the Buyer or any
Indemnifying Stockholder shall thereafter become entitled to a release of Escrow
Shares under the terms of this Agreement, the Escrow Agent may withhold such
distribution until such disputed amounts are paid or otherwise resolved.
9. Termination. This Agreement shall terminate upon the distribution by
-----------
the Escrow Agent of all of the Escrow Property in accordance with this
Agreement; provided that the provisions of Sections 6 and 7 shall survive such
termination.
10. Notices. All notices, instructions and other communications given
-------
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered two business days after it is sent by registered or certified
mail, return receipt requested, postage prepaid, or one business day after it is
sent via a reputable nationwide overnight courier service; provided, however,
that in no event shall any notice, instruction or communication be deemed to
have been received by the Escrow Agent unless and until actually received by it.
If to the Buyer:
Open Market, Inc.
Xxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx and Xxxx Xxxxxx
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Carp, Esq.
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If to the Indemnification Representative:
Xxxxxxx Xxxxxxx
___________________________
___________________________
with a copy to:
___________________________
___________________________
___________________________
Attn: _____________________
If to the Escrow Agent:
State Street Bank and Trust Company
Global Investor Services Group
Corporate Trust
0 Xxxxxx xx Xxxxxxxxx
Xxxxxx, XX 00000-0000
Attn: Open Market/FutureTense Escrow
If to any Indemnifying Stockholder: to the address set forth on Attachment
A, attached hereto.
Any party may give any notice, instruction or communication in connection
with this Agreement using any other means (including personal delivery, telecopy
or ordinary mail), but no such notice, instruction or communication shall be
deemed to have been delivered unless and until it is actually received by the
party to whom it was sent. Any party may change the address to which notices,
instructions or communications are to be delivered by giving the other parties
to this Agreement notice thereof in the manner set forth in this Section 10.
11. Successor Escrow Agent. In the event the Escrow Agent becomes
----------------------
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by
delivering a resignation to the parties to this Escrow Agreement, not less than
60 days prior to the date when such resignation shall take effect. The Buyer
may appoint a successor Escrow Agent without the consent of the Indemnification
Representative so long as such successor is a bank with assets of at least $500
million, and may appoint any
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other successor Escrow Agent with the consent of the Indemnification
Representative, which shall not be unreasonably withheld. If, within such notice
period, the Buyer provides to the Escrow Agent written instructions with respect
to the appointment of a successor Escrow Agent and directions for the transfer
of any Escrow Property then held by the Escrow Agent to such successor, the
Escrow Agent shall act in accordance with such instructions and promptly
transfer such Escrow Property to such designated successor. If no successor
Escrow Agent is named as provided in this Section 11 prior to the date on which
the resignation of the Escrow Agent is to properly take effect, the Escrow Agent
may apply to a court of competent jurisdiction for appointment of a successor
Escrow Agent.
12. General.
-------
(a) Governing Law; Assigns. This Agreement shall be governed by and
----------------------
construed in accordance with the internal laws of the Commonwealth of
Massachusetts without regard to conflict-of-law principles and shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns.
(b) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) Entire Agreement. Except for those provisions of the Merger
----------------
Agreement referenced herein, this Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements or understandings, written or
oral, between the parties with respect to the subject matter hereof.
(d) Waivers. No waiver by any party hereto of any condition or of any
-------
breach of any provision of this Escrow Agreement shall be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, shall be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
(e) Amendment. This Agreement may be amended only with the written
---------
consent of the Buyer, the Escrow Agent and the Indemnification Representative.
(f) Consent to Jurisdiction and Service. The parties hereby
-----------------------------------
absolutely and irrevocably consent and submit to the jurisdiction of the courts
in the Commonwealth of Massachusetts and of any Federal court located in said
Commonwealth in connection with any actions or proceedings brought against any
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party hereto by the Escrow Agent arising out of or relating to this Escrow
Agreement. In any such action or proceeding, the parties hereby absolutely and
irrevocably waive personal service of any summons, complaint, declaration or
other process and hereby absolutely and irrevocably agree that the service
thereof may be made by certified or registered first-class mail directed to such
party, at their respective addresses in accordance with Section 10 hereof.
(g) Dispute Resolution. It is understood and agreed that should any
------------------
dispute arise with respect to the delivery, ownership, right of possession,
and/or disposition of the Escrow Property, or should any claim be made upon the
Escrow Agent or the Escrow Property by a third party, the Escrow Agent upon
receipt of notice of such dispute or claim is authorized and shall be entitled
(at its sole option and election) to retain in its possession without liability
to anyone, all or any of the Escrow Property until such dispute shall have been
settled either by the mutual written agreement of the parties involved or by a
final order, decree or judgment of a court in the United States of America, the
time for perfection of an appeal of such order, decree or judgment having
expired. The Escrow Agent may, but shall be under no duty whatsoever to,
institute or defend any legal proceedings which relate to Escrow Property.
(h) Force Majeure. The Escrow Agent shall not be responsible for
-------------
delays or failures in performance resulting from acts beyond its control. Such
acts shall include but not be limited to acts of God, strikes, lockouts, riots,
acts of war, epidemics, governmental regulations superimposed after the fact,
fire, communication line failures, computer viruses, power failures, earthquakes
or other disasters.
(i) Binding Effect. This Agreement shall be binding upon the
--------------
respective parties hereto and their heirs, executors, successors and assigns.
(j) Reproduction of Documents. This Agreement and all documents relating
-------------------------
thereto, including without limitation, (a) consents, waivers and modifications
which may hereafter be executed, and (b) certificates and other information
previously or hereafter furnished, may be reproduced by any photographic,
photostatic, microfilm, optical disk, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
[Remainder of page intentionally left blank]
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ATTACHMENT A
------------
--------------------------------------------------------------------------------
INDEMNIFYING FEDERAL TAXPAYER
STOCKHOLDER ADDRESS I.D NUMBER PERCENTAGE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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ATTACHMENT B
------------
FEE SCHEDULE
------------
Acceptance Fee
--------------
An acceptance fee in the amount of $1,000 shall be payable to the Escrow
Agent upon acceptance of its appointments under the Agreement.
Annual Escrow Fee
-----------------
An annual fee for ordinary services shall be payable in an amount equal to
the sum of (i) $3,500 per year or any part of a year, plus (ii) $35 per
Indemnifying Stockholder per year or any part of a year (the "Annual Fee"). The
Annual Fee shall be due and payable in advance, upon signing of the Escrow
Agreement; thereafter upon each anniversary date. The Annual Fee shall be
subject to adjustment by the Escrow Agent annually, upon notice.
Wire Transfer Fees
------------------
A wire transfer fee of $20.00 per wire shall be charged for each outgoing
wire transfer.
Extraordinary Administrative Expenses
-------------------------------------
In addition to the Annual Fee, fees for extraordinary services will be
determined and charged by appraisal. Such services may include, but are not
limited to, additional responsibilities and services incurred in case of
default, or dispute or third party claim upon the escrow fund.
Out of Pocket Expenses
----------------------
Out of pocket expenses, such as but not limited to counsel fees and
expenses, telephone, postage, insurance, shipping charges, outside investment
charges and supplies, will be charged at cost.
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